Norway could be in line to issue a Central Bank Digital Currency (CBDC) if their cash use is anything to go by. In a recent speech, Norway’s central bank deputy governor Ida Wolden Bache stated that there has been a massive drop in how much citizens are making cash payments. At the same time, she offered that this could be the prime time to consider looking into a CBDC.
The decline of cash – digital tender on the rise
Norway’s rapid decline of cash payments is as a result of the global pandemic. With hygiene concerns, Norwegian citizens are looking to digital means to combat the possibility of spreading the COVID19 Coronavirus through handheld tender. Only 4% of payments in Norway are made using cash now.
“Only 4% of payments are now made using cash. This share is approximately the same as in spring, and considerably lower than before the pandemic… To our knowledge, the share of cash payments is lower in Norway than in any other country.”
Will cryptocurrency threaten the use of cash further?
The move towards a CBDC in Norway comes, as a result, to resolve issues related to cash while offering citizens a method of simple, traceable payments. Bach suggested that a CBDC could threaten the existence of cash, but also implied that the risk of losing cash usage might come at the reward of a more innovative method to payments.
“The question is whether something important will be lost if cash dies out and we do not introduce CBDC? Is central bank money crucial to confidence in the monetary system? Could CBDC provide more than cash can offer, in the form of a greater range of uses and more innovation?”
With all this said, Bach also pointed out that the prospective introduction of a CBDC is not around the corner. A national cryptocurrency would still need to be tested, piloted and considerable research of the potential consequences would need to happen. On this point, she stated: “The lack of urgency reflects our view so far that there is no acute need to introduce a CBDC. The introduction of a CBDC could have considerable consequences in a number of areas. Our decision must be well-informed.“